No adjustment is made in the cost of preferred stock for taxes since preferred stock dividends are not tax-deductible.

Name: No adjustment is made in the cost of preferred stock for taxes since preferred stock dividends are not tax-deductible.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Preferred stock dividends are paid out of after-tax profits and are not tax-deductible, so there is no adjustment needed for taxes when calculating the cost of preferred stock.

No Adjustment Is Made in the Cost of Preferred Stock